MAEK PTY LTD -v- IBRAHIM [2022] WASC 285 (31 August 2022)

Supreme Court of WA|2022-08-31|Before: Quinlan CJ

The plaintiff (MAEK) is a residential builder. These proceedings arise from a contract between MAEK and the first defendant (Sultan Ibrahim) for the construction of a residence in Dalkeith (Contract). MAEK claims that the second defendant (Mr Henry) was appointed as the superintendent under the Contract. Mr Henry denies that he was appointed as the superintendent, although he pleads that he was an employee of the superintendent, NS Projects (NSP).
MAEK makes a number of claims against Sultan Ibrahim, including for damages for breach of contract, damages under the Australian Consumer Law (WA)[1] and declaratory relief. In addition, MAEK brings claims against Mr Henry for damages under the Australian Consumer Law (WA).
This is an application by MAEK for an order for discovery pursuant to O 26 r 7(3) of the Rules of the Supreme Court 1971 (WA) (Supreme Court Rules) against Mr Henry. MAEK seeks an order that Mr Henry give discovery of five categories of documents (five categories) from a database of documents maintained by NSP (NSP Project File). The NSP Project File contains approximately 29,000 documents.
There is no issue that the five categories are relevant to issues in MAEK's claims in the proceedings. Indeed, Sultan Ibrahim has consented to orders that he give discovery of documents within categories that are relevantly identical to the five categories. Sultan Ibrahim has a copy of the NSP Project File, from which he is to give that discovery. In that context, it is also uncontroversial that the documents in the five categories are relevant to claims made by MAEK against Sultan Ibrahim but do not relate to the claims against Mr Henry.
Notwithstanding that Sultan Ibrahim is subject to an order to discover the five categories from the NSP Project File, MAEK nevertheless seeks an order that Mr Henry do so as well. The forensic benefit said to arise from such an order is that Mr Henry, as an employee of NSP, is 'the one best placed to identify the important documents from the NSP Project File'.

In April 2022 I made a number of orders, by consent, for the parties to confer in relation to categories of discovery and for informal discovery to follow.
On 1 July 2022 I made orders, again by consent, that the parties provide discovery in relation to various categories of documents. On 29 July 2022, I made orders for discovery of further categories of documents. Each of the parties is therefore subject to discovery obligations in relation to a number of categories of documents.
Included within those orders were orders that Sultan Ibrahim discover documents in the following categories:[2]

1(di) Documents Directly Relevant to the scope of works for the following trade packages: Contiguous Piling, Shotcrete, Hydraulic Services, Waterproofing, Structural Steels, Windows, Kitchen Equipment, Balustrades and handrails, Sundry Metalwork, Timber Doors, Cabinetwork, Roofing and roof plumbing, Stud walls and plasterboard Lining, Ceilings, Special Wall Finishes, Lift Services, Tiling, Roof Carpentry, Landscaping, Roof lights, Plastering, Electrical Services and Swimming Pool, construction estimates for these trade packages, correspondence about the scope work for the period June 2016 until the date of the relevant Principal Approval for each of the said trade package or approval of variations as pleaded at [39] and [49] of the SOC.

1(h) Variation approvals which are in issue in the proceedings being those identified in Attachment A, A1 and C (including documents Directly Relevant to the second defendant's consideration of the variation claims.

...

(a) Documents Directly Relevant to the allegations in Attachment E that the plaintiff was instructed to omit works from its scope of works because the relevant works were to be carried out by another contractor;

(b) Documents which evidence or record omitted works (as pleaded in Attachment E) being carried out by another contractor (including quotes obtained from third parties to carry out the works and the contracts/terms of engagement of third party contractors).

(d) Documents which evidence or record the instructions/directions given in respect to the Wet Kitchen and Gold leaf.

(f) Documents which evidence or record any direction or instruction by or on behalf of the first defendant as to the works to be completed under the Contract as at 5 May 2020.

Documents which evidence or record any direction or instruction given by or on behalf of the first defendant to the second defendant in respect to the payment of Variation Margin or additional preliminaries to the plaintiff under the Contract.
The pleadings to which these categories relate may be briefly summarised.
Categories 1(di), 1(h) and 12 relate to claims made by MAEK against Sultan Ibrahim in relation to the assessment by the Superintendent of alleged variation claims without awarding a Variation Margin (of 15%) and further preliminaries (of 8.155%) for various trade packages in relation to which the Contract identified provisional sums and an approval process leading to a Principal Approval.[3] MAEK pleads that there were increases in, or changes to the character or quality of the work required for a number of those trade packages, either at the time of the Principal Approval[4] or following Principal Approval,[5] that were required to be treated as variations under the Contract. MAEK pleads that, in breach of the Contract, the Principal Approval or variations were valued without any amount payable as the Variation Margin under the Contract or for additional preliminaries.
While these pleadings allege that Mr Henry failed to make the relevant valuations, the failure is pleaded as a breach of the Contract by Sultan Ibrahim.[6] Mr Henry does not plead to the allegations. Sultan Ibrahim denies the allegations. The First Defendant's Defence and Counterclaim dated 27 August 2021 (the Defence) pleads to the specific allegations in relation to the various trade packages (pleaded at Attachments A1 and C of the Statement of Claim). Those pleadings variously deny that particular approvals amounted to variations, that Mr Henry approved variations or that MAEK claimed a Variation Margin or additional preliminaries.[7]
Categories 1(h) and 12 also relate to claims made by MAEK that other variations of work were valued without awarding any amount for preliminaries (as set out in Attachment A of the Statement of Claim). MAEK again claims additional preliminaries at 8.155% of the subcontractors' price.[8] Mr Henry, again, does not plead to the allegations and Sultan Ibrahim denies them. Insofar as Sultan Ibrahim admits that the variations in Attachment A of the Statement of Claim were approved, he denies additional preliminaries at 8.155% were claimed or were payable.[9]
Categories 3(a), (c) and (d) relate to claims by MAEK that certain works were unlawfully removed from the scope of works to be completed by another contractor. The works, which are set out in Attachment E of the Statement of Claim, concern removal of a southern boundary wall, removal of pool tiling, removal of audio visual, and removal of a wet kitchen and gold leaf.[10] Again, while these pleadings allege that Mr Henry made the relevant directions, the failure is pleaded as a breach of the Contract by Sultan Ibrahim. Mr Henry does not plead to the allegations. Sultan Ibrahim denies the allegations and pleads to the detail in Attachment E.
Category 4(f) relates to MAEK's allegation that a Purported Practical Completion Certificate issued by Mr Henry was invalid and void, and that it gave rise to breaches of the Contract and was repudiatory.[11] Those claims are made against Sultan Ibrahim, which he denies.[12] MAEK also claims, against Mr Henry, that in issuing the Purported Practical Completion Certificate, he engaged in misleading or deceptive conduct on the basis that, acting fairly and honestly, he could not have formed an opinion that the stage of the works had reached practical completion.[13] Mr Henry denies that allegation.[14]
In relation to this latter claim, Mr Henry has consented to orders that he discover documents in the following categories (including from the NSP Project File):

Documents which evidence or record the formation of the Second Defendant's opinion that Practical Completion had been reached on 4 May 2020 (and conveyed to the Plaintiff on 5 May 2020) and any documents which evidence or record the inspection carried out by the Second Defendant and the First Defendant's agent and/or representatives on 4 May 2020. 2. Any documents (save for those which have already been provided to the plaintiff)recording the formation of the second defendant's opinion in certifying that no moneys were owed to the Plaintiff for progress claim 49. 3. Documents Directly Relevant to the 'FF&E Fitout' to be undertaken following Practical Completion. 4. Documents Directly Relevant to the allegations contained in [105] SOC, including:

(a) that the Purported PC Certificate was invalid and void;
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> (b) that the stage of the works had not reached the stage of Practical Completion;
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> (c) documents which evidence or record the state of the Property as at 5 May 2020(including video footage and photographs);
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> (d) that the residence could not be reasonably used as a residence.

Documents Directly Relevant to the allegation that the intended purpose of the 'Works' (as defined in the General Conditions of the Contract) at the time of Practical Completion was to be a residence.

MAEK's present application, relevantly,[15] seeks discovery 'only ... from the NSP Project File' of the following categories of documents:
1. For the period June 2016 until the date of the relevant Principal Approval foreach of the said trade package or approval of variations as pleaded at [39]and [49] of the SOC:

a) Documents Directly Relevant to the scope of works for the following trade packages: Contiguous Piling, Shotcrete, Hydraulic Services, Waterproofing, Structural Steels, Windows, Kitchen Equipment, Balustrades and handrails, Sundry Metalwork, Timber Doors, Cabinetwork, Roofing and roof plumbing, Stud walls and plasterboard Lining, Ceilings, Special Wall Finishes, Lift Services, Tiling, Roof Carpentry, Landscaping, Roof lights, Plastering, Electrical Services and Swimming Pool;
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> b) construction estimates for the trade packages referred to in (a) above;
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> c) correspondence Directly Relevant to changes in the scope work for the trade packages in (a) above.

Variation approvals which are in issue in the proceedings, being those identified in Attachment A, A1 and C, including documents Directly Relevant to the second defendant's consideration of the variation approvals. 3. a) Documents Directly Relevant to the allegations in Attachment E that the plaintiff was instructed to omit works from its scope of works because the relevant works were to be carried out by another contractor;

b) Documents which evidence or record omitted works (as pleaded in Attachment E) being carried out by another contractor (including quotes obtained from third parties to carry out the works and the contracts/terms of engagement of third party contractors);
>
> c) Documents which evidence or record the instructions/directions given in respect to the Wet Kitchen and the Gold leaf.

Documents which evidence or record any direction or instruction by or on behalf of the first defendant as to the works to be completed under the Contract as at 5 May 2020. 5. Documents which evidence or record any direction or instruction given by or on behalf of the first defendant to the second defendant in respect to the payment of Variation Margin or additional preliminaries to the plaintiff under the Contract.
As will be apparent, categories 16, 17, 18, 19 and 20 are relevantly identical to categories 1(di), 1(h), 3(a), (c) and (d), 4(f) and 12 respectively of the discovery to be given by Sultan Ibrahim.[16]
At the hearing of the application, MAEK relied upon an affidavit sworn by Phatcha Mintie Tantiprasut on 1 August 2022 (Ms Tantiprasut's affidavit). Mr Henry relied upon an affidavit affirmed by Ronan David Devahadsen on 9 August 2022 (Mr Devahadsen's affidavit).
The affidavit material relevantly establishes the following:

(a) the NSP Project File contains approximately 29,032 documents;[17]

(b) a hard drive containing the NSP Project File was provided to Sultan Ibrahim's solicitors on 4 June 2021;[18]

(c) the documents contained in the NSP Project File have been uploaded to a document management and discovery program called 'Nuix Discover';[19]

(d) Sultan Ibrahim's solicitors have confirmed that it is the NSP Project File that Sultan Ibrahim will be using when giving discovery.[20]

Ms Tantiprasut deposes to her own conduct of discovery for MAEK using an e-discovery platform (which has approximately 60,000 documents on it). She deposes that, while using text searches on the e‑discovery platform, she has required the assistance of employees of MAEK to identify that particular documents are directly relevant to the categories she has been searching.[21]
Counsel for MAEK emphasised, including by reference to this evidence, that a party's obligations in relation to discovery cannot be discharged solely by reference to text searches of document management programs, but must involve both the party and their solicitors involvement in identifying relevant discoverable documents.[22] That is, of course, correct. Even with the use of text search programs, it is necessary that solicitors and clients be actively involved in order to satisfy themselves that appropriate searches and inquiries have been conducted. At the same time, it would be unrealistic to think that the discovery process in a case such as this will be conducted by way of a manual examination, by the client and its solicitor, of each and every document unaided by technology. The reality is that the discovery process in this case will involve a combination of solicitor, client and algorithm.
Mr Devahadsen, in his affidavit, deposed to a sample review he had undertaken so as to estimate the time and cost required to provide discovery of the five categories. He estimated the costs to be approximately $217,000 (low) to $343,550 (high).[23] Counsel for MAEK, in submissions before me, undertook a detailed forensic critique of Mr Devahadsen's methodology and his ultimate conclusions in arriving at those estimates. MAEK therefore submitted that I should treat Mr Devahadsen's evidence in that regard with caution.[24]
It is not necessary, in my view, to enter too deeply into the debate as to Mr Devahadsen's methodology. No doubt any estimate that includes a range from low to high that is in excess of $120,000 might be vulnerable to criticism. In the end, however, Mr Devahadsen's estimate is just that: an estimate made at a high level of abstraction as to the likely task involved in providing the discovery sought by MAEK. It is not intended to be precise. Given the number of documents in the NSP Project File and the exercise that would be required to identify the five categories, in my view, it is clear that the time and cost involved in providing discovery of the five categories would be very significant, regardless of the criticisms that might be made of Mr Devahadsen's methodology.

The contemporary principles in relation to discovery are now well‑established. They include:[25]
1. A party does not have a strict entitlement to an order for discovery.
2. The power to order discovery is discretionary.
3. The discretion is to be exercised having regard to the timely and cost effective disposal of litigation.
4. On the other hand, discovery has been described as promoting the ascertainment of truth in litigation and as an essential part of the proper administration of justice.
5. Subject to the rules of privilege, there is a 'public interest in having available all evidence relevant to the issues in litigation'.
6. The ultimate test is whether the discovery is necessary for fairly disposing of the proceedings.
7. Relevance is not the only factor the court must consider in the exercise of the discretion to order discovery. But whether a document relates to a matter in question in the proceedings remains the descriptive criterion in O 26 of what documents should be discovered.
In this context, as Martin CJ observed in Roe v The State of Western Australia:[26]

[T]he extent of the obligation to give discovery and the entitlement to discovery will be fashioned having regard to the general principles that are articulated in the Rules of the Supreme Court 1971 (WA) and in particular the principles enunciated in O 1 r 4A and r 4B. Those principles include and expressly embody the notion of proportionality, which requires a court, before ordering any interlocutory process, to assess whether the forensic benefit to be derived by that process is proportional to the cost and delay which will flow from the undertaking of the process, having regard to the value, importance and complexity of the subject matter in dispute and the financial position of the parties.

In the context of discovery, this means that when issues arise with respect to the breadth of the discovery to be ordered, the ambit of discovery will be determined taking into account the cost and delay associated with the provision of discovery over a broader ambit, as compared to the forensic benefit likely to be derived from the provision of discovery over that broader ambit. Unless the cost and delay involved in the provision of that discovery is proportionate to the forensic benefit likely to be derived from a broader ambit of discovery, and to the value and importance or complexity of the subject matter of the proceedings, a narrower ambit of discovery will be ordered.

As I have noted above, save to the extent that category 4(f) might overlap with the misleading and deceptive conduct claim against Mr Henry, the five categories the subject of MAEK's application relate to claims made against Sultan Ibrahim. As the Court of Appeal recently concluded, the Court's power to order discovery under O 26 r 7 of the Supreme Court Rules, extends to any party to the action, whether or not those parties have joined issue in relation to the particular matter the subject of the application for discovery.[27] As the Court recognised, however, that broad power is hedged with considerable discretion, to be exercised in light of the principles I have set out above.[28]

The starting point for determining MAEK's application, in my view, is the fact that Sultan Ibrahim has consented to orders that he give discovery of the five categories from the NSP Project File. There is no suggestion, and indeed MAEK disavowed any suggestion, that Sultan Ibrahim will not comply with his discovery obligations or produce less than what is required.[29]
The process of discovery by Sultan Ibrahim, if it is conducted properly, including with appropriate inquiries, should yield the same documents as those sought to be discovered by Mr Henry. Accordingly, MAEK's submission on the application is ultimately to the effect that:

(a) Sultan Ibrahim might fail to discover some particular document (or documents) that he ought to discover because he, his lawyers and other persons advising him, fail to recognise or identify that a particular document in fact falls within one of the five categories; and

(b) conversely, Mr Henry, his lawyers and other persons advising him, would recognise or identify that the particular document does fall within one of the five categories.

As MAEK put its position 'there is a forensic benefit to the parties and the Court for all parties to turn their mind to identifying important documents at the same time',[30] emphasising that the NSP Project File is a file emanating from Mr Henry's employer. Essentially, the forensic benefit said to arise from Mr Henry also providing discovery of the five categories is that Mr Henry may bring a more nuanced appreciation of whether particular documents are relevant to, or fall within, one of the five categories.
I would observe, in passing, that it is difficult to see how this would be the case in relation to, at least, categories 19 and 20. Those categories relate to documents evidencing or recording instructions by, or on behalf of, Sultan Ibrahim. It might reasonably be thought that those advising Sultan Ibrahim would be as well placed as Mr Henry to identify such documents. It may also be observed, in relation to category 19 (which relates to the Purported Practical Completion Certificate), that Mr Henry's existing obligations as to that matter are very broad and probably cover that category in any event.
Nevertheless, I do not discount the possibility that Mr Henry might be able to bring a unique perspective in relation to some document or documents as to whether they properly fall within one of the five categories. On the basis of the material before me, however, that possibility, and the potential forensic benefit from Mr Henry providing discovery of the same categories from the same collection of documents as those held by Sultan Ibrahim, must be regarded as, to a large degree, speculative.
I have reached that view for the following reasons.
First, while it is certainly within the Court's power to order discovery against Mr Henry in relation to issues joined between MAEK and Sultan Ibrahim, it is nevertheless the case that discovery of the five categories will relate to issues that are defined by the detailed pleadings between MAEK and Sultan Ibrahim. While Mr Henry might (at least theoretically) have a greater appreciation of the factual content of a particular document, it is Sultan Ibrahim, his solicitors and his other advisers who will inevitably have a greater appreciation of the nature of the controversy to which the discovery is directed.
Secondly, it is not known, at this time, what documents will be discovered by Sultan Ibrahim from the NSP Project File, or whether any particular issues of identification will arise in relation to the five categories. It does not necessarily follow from Ms Tantiprasut's evidence in relation to the assistance she has received from employees of MAEK in identifying relevant documents, that the assistance of Mr Henry in particular would be required in order to determine that a particular document fell within one of the five categories. As Ms Tantiprasut deposes,[31] Sultan Ibrahim engaged a number of consultants and representatives, both in Perth and Malaysia, in relation to the construction of the residence, who will have knowledge of the project. No doubt, in discharging his own discovery obligations, Sultan Ibrahim and his solicitors will be able to make inquiries with, and receive assistance from, those persons.
Thirdly, as I have just observed, the discharge of Sultan Ibrahim's own discovery obligations will require him and his solicitors, to make appropriate inquiries with other persons for the purpose of identifying documents that fall within the five categories.[32] There is no reason to suppose that Mr Henry will be excluded from the group of persons with whom relevant inquiries might be made and, indeed, every reason to suppose that he should be included. That is, if the proper discharge of his own discovery obligations requires that Sultan Ibrahim and his solicitors make appropriate inquiries with Mr Henry in relation to a particular document or documents, then that is what should occur based on the orders that have already been made.
For these reasons, in my view, it cannot be concluded that a significant forensic benefit would be derived from making an order that Mr Henry give discovery of the five categories of documents from the NSP Project File.
That being the case, in my view the cost and delay that would be occasioned by making such an order would be wholly disproportionate to whatever forensic benefit might be derived from such discovery by Mr Henry. As I have concluded above, whatever criticisms might be made of Mr Devahadsen's estimate of the likely time and cost involved in providing discovery of the five categories, on any view that time and cost would be significant. That time and cost outweighs what I consider to be an unlikely forensic benefit.
For all of these reasons, the discovery sought by MAEK is not necessary to fairly dispose of these proceedings.
The application must be dismissed.

I certify that the preceding paragraphs comprise the reasons for decision of the Supreme Court of Western Australia.

[1] Competition and Consumer Act 2010 (Cth), Sch 2 as applied by the Fair Trading Act 2010 (WA).

[2] Categories 1(di), 3(a), (b) and (d), 4(f) and 12 were the subject of the orders made on 1 July 2022 and category 1(h) was the subject of the orders made on 29 July 2022.

[4] Second Further Re‑Amended Statement of Claim dated 6 August 2021 (Statement of Claim) [39] ‑ [41].

[6] Statement of Claim [42] ‑ [44], [50] ‑ [53].

[7] Defence, Attachment A1 and Attachment C.

[8] Unlike the Variation Margin of 15%, a rate for additional preliminaries of 8.155% does not appear in the Contract.

[10] Statement of Claim [85] ‑ [88], Attachment E.

[11] Statement of Claim [105] ‑ [110].

[13] Statement of Claim [124] ‑ [125] (incorporating [105]).

[14] Second Defendant's Defence dated 27 August 2022 [7] ‑ [9].

[15] Two further categories of documents originally included in MAEK's chambers summons were ultimately the subject of agreement between the parties.

[16] The order and format of category 16 differs from category 1(h), but the substance is the same.

[20] Ms Tantiprasut's affidavit, Annexure PMT5, 202 ‑ 203.

[21] Ms Tantiprasut's affidavit [22] ‑ [27].

[22] Bolitho v Banksia Securities Ltd (No 18) [2021] VSC 666 [1380] (John Dixon J).

[24] Plaintiff's Outline of Submissions in Reply dated 15 August 2022 [30].

[25] Singh v Friedman [2013] WASC 78 [3] ‑ [4] (Allanson J); Tah Land Pty Ltd v Western Australian Planning Commission [2022] WASC 219 [14] (Tottle J).

[26] Roe v The State of Western Australia [2013] WASC 130 [10] ‑ [11] (Martin CJ).

[27] DFD Rhodes Pty Ltd v Hancock Prospecting Pty Ltd [2022] WASCA 97 [281] ‑ [297] (Quinlan CJ & Beech JA).

[28] DFD Rhodes Pty Ltd v Hancock Prospecting Pty Ltd [2022] WASCA 97 [290] (Quinlan CJ & Beech JA).

[29] Plaintiff's Outline of Submissions in Reply dated 15 August 2022 [12].

[30] Plaintiff's Outline of Submissions in Reply dated 15 August 2022 [10].

[31] Ms Tantiprasut's affidavit [9], [22] ‑ [27].

[32] Bolitho v Banksia Securities Ltd (No 18) [2021] VSC 666 [1380] (John Dixon J).

At a glance

Court

Decision date

Before

Source

Judgment (48 paragraphs)

Legislation Cited (2)